The government is presenting the Vote-on-Account (more like an interim budget) on 16th of Feb, 2009. This is to take the approval of the parliament to withdraw money from the consolidated central government fund to meet expenditures till the elections are over and the new government takes over. This being the last budget of the out-going government before the election commission announces the date for general elections; the government may announce populous measures. But the government may refrain from making any drastic policy changes. Limited revenues and rising expenditures leave little room for the government to go for more fiscal stimulus in terms of higher spending. Continuing the measures in the previous few years’ budgets, infrastructure investment and employment generation may continue to get higher thrust. But as the government may refrain from making any policy decision changes, it may focus on consolidating the earlier announced measures as well as boosting the reeling sectors. Moreover, the government may also tweak the indirect taxes (excise and customs duty) for various sectors as they don’t require the parliament approval and can be changed at any time.

Sector: Auto

Particulars: Excise duties

• 12% on small cars (length not exceeding 4,400 mm and engine capacity not exceeding 1,200 petrol (petrol, LPG and CNG) /1,500 cc (diesel)

• Big cars - 20%

• Two- Three wheelers -12%

• Cut in excise duty to 10%

• Cut in excise duty to 16%

• Cut in excise duty to 10%

• Push the demand for vehicles.

• Demand driver

• Support demand growth

Sector: Banking

• Income tax on Interest income from banks, exemption limit to be reimposed

• Raising limit of tax exemption on interest payment of housing loans

• No exemption on income tax is there in current status

• Current limit – Interest payment-Rs150000

• To reinstate Rs.12000 - Rs.15000 of exemption in interest income from taxation

• Expected limits to increase deduction of Rs.150000 to Rs 200000 or Rs.250000

• Will help banks to garner more deposits and mange asset liability mismatch as currently with term deposits are falling continuously making them less attractive going forward All banks to benefit

• Beneficial for housing finance companies, banks as credit demand for housing will rise and as real estate demand is again restored, rising risk of NPA's is less. Stocks- HDFC, LIC Housing Finance & large banks like SBI to benefit.

Sector: Cement

Particulars: Excise duties

Current Status: 8% on MRP Big cars - 20%

Proposed measures: Abatement on MRP for calculating Excise duty

Impact (on sector & major stocks): The benefit is likely to be passed by cement industry in medium term by reducing cement prices

Particulars: Import duty

Current Status: Nil

Proposed measures: Re imposition of Import duty

Impact (on sector & major stocks): To benefit north Indian cement co.

Sector: Hotels

Particulars: Inclusion of hotel Industry under infrastructure sector

Current Status: Currently Hotel projects are considered as "Real Estate" rather than "Infrastructure projects"

Proposed measures: Hotels to be given "Infrastructure" status under Sec 80-IA of Income Tax Act.

Impact (on sector & major stocks): This would enable hotels to access cheaper debts.

Particulars: Tax Holidays

Current Status: Tax holidays is currently available u/s 80-ID for new hotel projects of a particular category and is valid for Delhi-NCR to boost common wealth games infrastructure

Proposed measures: Extend the benefits of the section 80-ID to other parts of India

Impact (on sector & major stocks): Will be beneficial for all Hotel projects in India

Particulars: Service Tax on tour packages

Current Status: Currently 12.5% of service tax is levid on tour packages

Proposed measures: Reduction / cancellation of service tax on tour packages

Impact (on sector & major stocks): Will make Indian tour packages more competitive in term of price compared with other south Asian destination, which would help in boosting tourism business in India.